CHULA VISTA, CA (CLOSED)
a single asset investment opportunity
A fully leased, class A medical property providing critical service to a growing population. The investment is managed by Chestnut Funds and Anchor Health Properties, a national healthcare real estate development, investment, and management company.
STRATEGY/ASSET TYPE: Core, Medical Office
INVESTMENT SIZE: $1,000,000
MINIMUM INVESTMENT: $50,000
(Accredited Investors with Qualified Client Status Only)
CLOSED: June 2022
Chestnut Funds is offering a co-investment alongside one of its funds which invests to acquire medical office buildings, for investors to invest in a Class A, 9,500 square foot medical office building in Chula, Vista, CA.
Sanderling Renal Services, part of a national network of dialysis centers, has master leased the asset on an absolute NNN lease that extends to October 2028. The tenant’s space is currently under construction and due to be completed in Q2 2022. Closing of the investment will occur when the tenant occupies the space.
Why We're Investing
Market: The asset is located in the Chula Vista submarket of San Diego, just 10 miles from downtown. Chula Vista offers upper income demographics and modern retail, housing and commercial office facilities. Within a three-mile radius of the buildings, the population is 101,425 and average household income is more than $130,000.
The Chula Vista submarket has significant health system presence such as UC San Diego, Scripps and Sharp and institutional ownership including Welltower, Ventas, Anchor Health Properties, and Medical Properties Trust.
Property Demand: The asset resides in a medical park featuring prominent regional health system tenants from a wide variety of clinical specialties including orthopedics, radiation oncology, obstetrics and gynecology, primary care, imaging and lab services. The medical park is comprised of four other outpatient medical buildings and is 100% occupied. Supportive market demographics suggest a competitive landscape with potential rent growth in the future and a continued need for this particular medical specialty. This asset sits adjacent to an existing investment in our portfolio that has been a strong performer, indicating healthy market demand.
Strong Tenancy and Lease Term: Sanderling Renal Services is a growing and well-capitalized dialysis center operator. Additionally, the in-place lease with annual escalations and full pass through of property operating expenses provides an investment opportunity with predictable and secure cash flow.
Chestnut’s funds have invested in seven medical office buildings in the San Diego market, deploying $4,200,000 of fund capital to invest in the acquisition of acquire 540,000 square feet of property.
Our current market experience suggests that there has been more than 4.5% annual market growth since we acquired our first asset in this submarket in 2017. This growth has allowed us to increase rental rates and lease terms at existing assets, and we would expect to do the same with this investment.
Chestnut’s medical office building funds acquire smaller and middle market assets with the intent to aggregate properties to create a portfolio sale of sufficient scale to attract institutional capital. As a co-investment of Chestnut Healthcare Fund II, this property is likely to be sold as part of a portfolio, benefitting from the expected portfolio pricing.
This summary (“Summary”) is not an offer or sale, or a solicitation to any person to buy, of any security or investment product, nor is intended to be investment advice. The information contained in this Summary has been prepared by one or more general partners, management companies and/or other entities affiliated with Chestnut Chula Vista, LP (“Chestnut”) and is furnished on a confidential and limited basis for the sole and exclusive purpose of providing general and background information concerning private equity funds (each a “Fund”) sponsored by Chestnut or its affiliates. Any offer, sale or solicitation of securities in any Fund will be made only pursuant to a Limited Partnership Agreement (as amended and/or supplemented from time to time, and including, without limitation, the legends contained therein) and subscription documents, and will be subject to the terms and conditions contained in the Limited Partnership Agreement and such subscription documents. This Summary is qualified in its entirety by reference to any Limited Partnership Agreement.